Tobacco products, some produced in joint ventures with Chinese firms, are smuggled and sold across Asia, sources say.

2017-11-16

North Korean leader Kim Jong Un poses with a cigarette in an undated photo.

Despite international trade sanctions imposed by the United Nations, North Korea continues to pull in badly needed foreign cash through the sale of tobacco products, much of it produced in joint ventures with China and sold as counterfeit cigarettes across Asia, sources say.

The impact of U.N. bans on North Korean exports—covering mostly seafood, coal, iron, and lead ore—is now largely cushioned by the trade, one North Korean source now traveling abroad told RFA’s Korean Service in a recent interview.

“He is probably making tens of millions of dollars through these joint-venture tobacco companies,” the source said.

Many North Korean factories have been hit hard by sanctions, but tobacco factories in North Korea are thriving, sources say.

“The most active factories still running in North Korea are the tobacco factories,” a Chinese businessman working in the capital Pyongyang told RFA.

Of these, about 20 are joint ventures run by Chinese and North Korean firms, some of which are managed solely by North Korea, the source said. “But regardless of who manages them, the ingredients needed to manufacture tobacco products are imported from China.”

'Big profits for Kim'

Some of these products are intended for domestic consumption, but most are falsely labeled with fake foreign brands and smuggled to Hong Kong, Macau, and Southeast Asian countries where they are sold at prices far greater than their cost to produce, the source said.

“North Korean tobacco products have a low production cost, and quality-wise they are not so bad, so they have been selling well,” a source in China’s Dandong city, a trade hub across the border from North Korea, told RFA.

“These sales earn big profits for Kim Jong Un’s political funds,” RFA’s source said, also speaking on condition he not be named.

Speaking separately, a source in North Korea’s North Hamgyong province, bordering China, said that one North Korea-China joint venture company, the Taedong River Tobacco Company, produces counterfeit products with South Korean brand names.

“Meanwhile, the Pyongyang Ryongseong Tobacco Company produces counterfeit tobacco products bearing famous foreign brand names like ‘Marlboro’ and ‘Dunhill,’” the source said, adding that most of these fake products are sold in Southeast Asian and African countries at a low price.

Some high-quality domestic brands, including “7.27” and “Geonseol,” have for years been sold mainly to North Korean officials of different ranks, but are now being made available to ordinary citizens as well, one source said.

Reported by Joonho Kim and Sunghui Moon for RFA’s Korean Service. Translated by Leejin Jun. Written in English by Richard Finney.